Monday, October 2, 2017

Vodafone Portugal has reached a network sharing agreement with NOS (formerly Portugal Telecom Multimedia), a Portuguese media holding company whose main assets include a satellite, cable operator, and ISP, a mobile phone operator, a movie distributor (NOS Audiovisuais) and a virtual carrier of mobile phone services.

Under the deal, the companies will deploy and share a fibre-to-the-home network which will be marketable to around 2.6 million homes and businesses in Portugal. The two companies will provide reciprocal access to each other’s networks on commercially agreed terms.

Key elements include:

Vodafone Portugal will gain access to 1.3 million homes and businesses in new areas, consisting of new fibre builds in NOS’s current cable footprint, NOS’s existing fibre reach in areas greenfield to Vodafone, and building homes in new areas. This will increase its total coverage from 2.7 million to around 4.0 million, representing 80% of the households in the country.

Each party will deploy, but not share, the link between the central office and the fibre backbone, active equipment and CPEs. Customer connections and activations will be independent of each other.

Marketing of services across the joint network will commence from the beginning of calendar 2018.

Both Vodafone Portugal and NOS will maintain complete autonomy and flexibility in respect of their respective retail offers.

Vodafone said the arrangement in Portugal is consistent with its fixed infrastructure strategy, which aims for an optimal mix of build, strategic partnerships, wholesale and buy approaches.

Customers can access the firewall service via a constellation of security gateways distributed across Asia Pacific, Europe, Middle East and Africa and North America. All of these gateways are connected via Level 3's global VPN backbone.
Level 3 said it currently monitors over 1.3 billion security events across 94 billion NetFlow sessions daily, in addition to activity by over 5,000 command and control servers (C2s) and malicious IPs, creating rules to detect and block attacks.

"While the threat landscape continues to evolve, enterprises are seeing the cost and complexity of security solutions continue to rise. Level 3's expansion of Adaptive Network Security marks the next step in delivering adaptive networking solutions to break the hardware dependency cycle and reduce the administrative burden of trying to stay ahead of bad actors. Global businesses can leverage Adaptive Network Security for the latest security technology to keep their networks and workforces secure while they focus on what matters most to their business," stated Chris Richter, SVP of Global Managed Security Services for Level 3.

Nearly ten days after Hurricane Maria struck Puerto Rico, 88.3% of cell sites across the island remain out of service, according to the FCC. The figure is basically unchanged in the past few days.

In the U.S. Virgin Islands, 68.9% of cell sites remain down. All of the cell sites in St. John are still out of service.

The FCC continues to post a daily outage report but has not yet convened a public hearing into the disaster, nor has it speculated as to when the public should expect services to be restored. Claro (America Movil), AT&T, T-Mobile and Sprint are the major cellular operators serving Puerto Rico.

Sandra Torres, the president of Puerto Rico's telecom regulatory authority (Junta Reglamentadora de Telecomunicaciones JRT) told local media on Sunday that the goal is to restore 50% of cell sites within 30 days. She said AT&T has installed a few COW (Cell on Wheels) units around the island, but no number was given. The JRT website remains offline.

PREPA Networks, the dominant fiber network operator across Puerto Rico and a business unit of the island's hard-hit electrical utility company, has not provided any public statements about the damage to its network since before the hurricane.

The U.S. Senate voted to confirm Ajit Pai for a second term as chairman of the FCC. Ajit Varadaraj Pai was nominated for FCC Commissioner by President Obama in 2011. Pai took over the seat abandoned by Meredith Baker who left the FCC to take a job as a lobbyist for Comcast. Pai was previously a Partner in the Litigation Department of Jenner & Block LLP. Previously, Pai worked in the Office of the General Counsel at the Federal Communications Commission, where he served as Deputy General Counsel, Associate General Counsel, and Special Advisor to the General Counsel. He holds a B.A. from Harvard University and a J.D. from the University of Chicago.

Separately, Dr. Eric Burger was appointed Chief Technology Officer of the FCC. Prior to joining the Commission, Dr. Burger served as director of the Security and Software Engineering Research Center in Washington, DC. Previously, he has taught computer science at Georgetown University, George Mason University, and The George Washington University. He holds a Ph.D. in computer science from Illinois Institute of Technology, an MBA from Katholieke Universiteit Leuven in Belgium, and bachelor’s degree from Massachusetts Institute of Technology.

Oracle 18c, which will be released later this year, uses machine learning to eliminate human labor involved with managing the database. The automation includes upgrades, security patches and tuning to ensure a 99.995% uptime guarantee. Ellison claims this automation will reduce typical AWS Redshift bills by over 50% while delivering significantly better performance. Demos at Oracle World showed 6 ~ to 8X advantage for Oracle compared to AWS.

VIRTUS Data Centres announced plans two new buildings at its eight-acre campus near Stockley Park, West London.

The new two facilities, known as LONDON5 and LONDON6, measure 34,475m2 and are designed to deliver 40MW of IT load. LONDON5 is expected to be ready in early 2018.

The VIRTUS campus is 16 miles from central London on the main fibre routes from London to Slough, and 7 miles from Slough. The company said this expansion strengthens its position as the largest hybrid colocation provider in the London metro area. These two new data centres will provide an additional 17,000NTM (net technical metres) of IT space and will increase VIRTUS’ portfolio in London to approximately 100MW across their six facilities in Slough, Hayes and Enfield, with the power to expand to circa 150MW on the various campuses.

The headline from Saturday’s The Sydney Morning Herald on 19-August-2017 reads “End of the line: Telstra’s day of reckoning has arrived.” At issue is shareholder discontent following a disappointing fiscal year, shrinking dividends, and rising competition. Earlier in the week Telstra’s CEO Andy Penn announced that starting next year the company will trim its dividend 30%, marking the first time in 19 years that the company cuts its dividend. Shares in the company (ASX:TLS) closed on Friday at A$3.90, down roughly 10% from two days earlier.

Last week, Telstra outlined two other financial maneuvers that drew scrutiny from investors and the media. First, Fox Sports Australia will be merged into Foxtel, giving the media company more valuable content, but also reducing Telstra’s stake in the venture. Eventually, Foxtel may pursue an IPO, which may benefit Telstra but move it further away from being a media company in its own right. Unlike many global operators who are rushing to become integrated network + content players, this arrangement appears to take Telstra in the other direction.

Second, in a move to satisfy bond holders, Telstra may bundle up all future receipts from NBN into a separate security. While this would reduce debt, it also seems to take away more of the historical base of the company. What will be left? The judgement from The Sydney Morning Herald was harsh: “This week's developments offer striking evidence of how Telstra has utterly failed to transform itself from its monopoly past.”

Rising competition
To be fair, Telstra is facing new competition in both the fixed-line market and mobile services. Australia’s National Broadband Network constrains what could be done in terms of fixed-line residential services, where Telstra is moving from being the primary fixed network operator to one of many retailers competing in a lower-margin environment.

In mobile, Telstra has built a world-class network that routinely is first to deploy the latest and greatest technical innovations. Peak download speeds of up to 1 Gbps over the Telstra 4.5 G network are now possible in some cities across the country. Management is quite aware of the digital transformation occurring across markets and knows that to stay ahead it will have to invest heavily in its network. The 5G rollout is just over the horizon.

To keep up, Telstra argues that it must accelerate its transformation, even at the expense of generous dividends. The company has previously stated its intention to invest up to A$3 billion in additional capital expenditure over the next three years, an amount that is in addition to its usual capital spend.
This takes the expected total capital investment, including spectrum, over the three years to FY19 to more than $15 billion. Since November 2016, Telstra has invested around $750 million in its network, while reducing underlying fixed costs by $244 million. These cost reductions will now be accelerated, bringing forward a $1 billion net productivity target by one year to FY20.

The FY 2017 Results

The just-published financial results show that Telstra remains a profitable company, although less so than before, with many possibilities to grow, even with Australia’s GDP expanding by an anemic 0.3% in Q1 2017 and possibly remaining flat for the year as a whole. In most of its product categories, Telstra’s fiscal 2017 revenue shrank, but so did its costs as it gains efficiency.
On a reported basis from continuing operations, Telstra’s total income1 increased 4.3 per cent to $28.2 billion. EBITDA increased 2.0 per cent to $10.7 billion and basic earnings per share increased 2.8 per cent to 32.5 cents. nbn connections grew by 676,000 to 1,176,000 bringing total market share (excluding satellite) to 52 per cent

“It is against the backdrop of these market dynamics that we announced during the year our intention to invest up to $3 billion over the next three years to achieve a further step change in our strategic positioning to deliver economic benefits of more than $500 million of EBITDA by 2021,” stated Telstra CEO Andrew Penn.

Here are some top-line results

Some Telstra highlights for 2017

•Telstra Retail income, comprised of Telstra Consumer and Telstra Business, was largely flat excluding the impact from the Mobile Terminating Access Service (MTAS) regulatory decision, down 0.2 per cent. O
•Telstra now has 17.5 million mobile customers, including 7.6 million postpaid handheld retail customers
•Postpaid handheld revenue ended the period flat at $5,448 million, but importantly, it was 0.8 per cent higher in 2H17 compared with the previous corresponding period and 0.9 per cent higher compared with 1H17. While postpaid handheld ARPU declined by 2.5 per cent from $69.45 to $67.70 (excluding the impact of mobile repayment options), there was continued growth in minimum monthly commitments offset by the impact of factors such as unlimited calls, larger data allowances, lower cost of excess data, and a higher mix of bring your own (BYO) device plans.
•Telstra's 4G network now reaches 99 per cent of the Australian population
•Telstra is now deploying 577 new 3G/4G base stations and up to 250 small cells under the Federal Government’s Mobile Black Spot Program
•Telstra's mobile network now has more than 100 sites across five capital city CBDs capable of delivering peak speeds of 1Gbps (typically 5Mbps-300Mbps)
•In ADSL, more than 80 per cent of Telstra customers now have speeds that support a quality video experience
•The company says it is on track for its first 5G trials early next year on the Gold Coast
•In 2016, Telstra conducted 5G radio testing in Melbourne, delivering peak download speeds of greater than 20Gbps
•This year, Telstra decommissioned its 2G mobile network, which was first launched in 1993.
•The Telstra Live Pass, which lets customers watch every AFL, NRL and National Netball game live, fast and data-free, now has 1.45 million subscribers
•Telstra TV now has with 827,000 devices in market and a growing number of apps including Netflix, BigPond Movies, Stan, Foxtel Now and Yupp TV
•Fixed revenue declined by 4.7 per cent to $6,407 million. Fixed voice revenue decreased by 9.1 per cent to $3,125 million while fixed data revenue grew by 1.6 per cent to $2,553 million.
•The company says the Telstra Programmable Network is helping enterprise customers with digital transformation by transforming the way they interact with the network. The Telstra Programmable Network uses SDN and NFV to provide flexible bandwidth across Asia Pac. Telstra owns and operates the largest subsea cable network in the Asia Pacific region. This year Telstra plans to introduced assured availability across the busy Hong Kong, Singapore and Japan triangle. This utilises the scale and diversity of the network to reroute and maintain connectivity in the event of a cable cut or damage due to a natural disaster.
•Telstra has entered into an agreement with Anent, Google, Indosat Ooredoo, Singtel and SubPartners to build a new international subsea cable to connect Singapore, Indonesia and Australia.
•During the year, Telstra was awarded a $243 million 10-year deal with Australia's Department of Foreign Affairs and Trade to provide a global WAN across 157 sites.
•In China, Telstra sold the remaining 6.5 per cent interest in Chinese online business Auto home to Ping An Insurance Group for US$217 million (A$283 million)
•During the year, Telstra made several strategic investments, including in VeloCloud Networks (SD-WAN) and Crowdstrike (cloud-delivered endpoint protection).
•In FY17, the number of first stage (Level 1) complaints made about Telstra to the Telecommunications Industry Ombudsman increased, with nbn-related issues being a key driver.
•During the year, the company activated its one millionth Telstra Air hotspot - Australia’s largest Wi-Fi network.
•Telstra currently has 32,000 employees in over 20 countries
•In FY18, Telstra expects Income in the range of $28.3 to $30.2 billion and EBITDA of $10.7 to $11.2 billion. CAPEX is expected to be between $4.4 - $4.8 billion or approximately 18 per cent capex to sales and free cashflow is expected to be in the range of $4.4 - $4.9 billion.
•Telstra expects total dividends in respect of FY18 to be 22 cents per share fully-franked, including both ordinary and special dividends.
•Telstra’s objective is to have at least four women on the Board, representing a female gender representation among non-executive Directors of at least 40 per cent.
•In June, Telstra announced that it has acquired Company85, a UK-based technology services business headquartered in London that offers data centre, workspace, cloud, security and network services. Established in 2010 and based in London, Company85 has approximately 75 employees and focuses on providing services to major UK-based business and government customers including the BBC, NHS, Royal Mail and London City Airport, as well as multinational corporations including AstraZeneca, J.P. Morgan and Roche.

On the mobile side, Telstra has built a world-class network that often leads globally in new technology rollout. However, the market is saturated with competitors, causing growth to slow and ARPU likely to decline.Commentary from Telstra executives in its recent financial report speculate that a fourth mobile network operator is a possibility from the government’s perspective. Mobile market share in Australia as of June 2017 is roughly as follows, according to Kantar, the market research firm:

Telstra – 39%, down from 41% a year earlier
Optus – 24.2%, up from 21.8% a year earlier
Vodafone – 14.4% down from 15.2% a year earlier.

The remaining percentages are attributed to at least 5 mobile virtual network operators (MVNOs) using infrastructure from these top players.

Update on SingTel’s Optus

Optus, which is a wholly-owned division of SingTel, recently announced its intention to spend A$1 billion to strengthen and expand its mobile network in regional Australia by the end of June 2018. The initiative will see the construction of 500 new mobile sites across regional and remote parts of Australia, including 114 sites under the Federal Government’s Mobile Blackspots Program. Optus will complete its 4G program by upgrading more than 1,800 sites from 3G to 4G. Optus will also add additional 4G capacity to more than 200 sites and continue to roll out satellite small cells, which provide mobile voice and data services to remote areas of Australia. Currently, Optus has 30 small cell sites across regional Western Australia, South Australia and the Northern Territory. Some of this budget may also go to spectrum licences in regional areas.

On August 1st, Optus officially deactivated its 2G network, which was first turned on in 1993. All traffic has been moved to the 3G and 4G networks. The migration also impacted Virgin Mobile, which operates as an MVNO on the Optus infrastructure. 4G customers now account for 60% of Optus’ total mobile customer base.

Additional spectrum bands could be coming

The ACMA has several proceeding underway to open further spectrum bands for new services. Specifically, the 1.5 GHz and 3.6 GHz bands have progressed from an initial investigation to a preliminary replanning stage for mobile broadband reuse. The 3.6 GHz is being given a higher priority of 1.5 GHz planning in order to give certainty to incumbent services currently using the band.

Optus 5G trials with Huawei

Earlier this year, Optus completed a pre-5G field trial of Huawei’s Massive MIMO AAU solution, which has 16 beamforming streams in a 128T128R configuration. Optus reported aggregate cell throughput of 665Mbps over a single frequency channel of 20MHz on Optus’ 2300MHz frequency band, shared by 16 devices.

Since February, Optus has been running 4.5G network services across the suburb of Macquarie Park, Sydney’s hi-tech innovation district, north-west of the city. Peak speeds of 1.03 Gbps have been reported in the downlink. Optus says it will have similar capabilities working in selected capital cities. By February 2018, the goal is to reach over 70% of the Optus network in Sydney, Melbourne, Brisbane, Perth and Adelaide. Here again, Huawei is the lead supplier. The Optus technology trials and rollouts builds on a strategic alliance focused on joint R&D that parent telco Singtel signed with Huawei in 2014.

However, SingTel has also conducted pre-5G trials with ZTE in Singapore, and earlier this month, Singtel stated that it will team with Ericsson, Huawei and ZTE to deploy massive MIMO technology at the Marina Bay area. The additional capacity was desired for Singapore’s National Day celebrations, with further deployments planned for the Singapore F1 Night Race and the New Year countdown event.

Optus Financial Trends

Optus recently reported a strong Q2 with operating revenue increasing 4.8 per cent to A$2,095 million due to higher Mobile and NBN revenues, partially offset by decline in Wholesale Fixed revenues. Some highlights:
•EBITDA increased 2.6 per cent to A$662 million underpinned by growth in mobile and fixed businesses.
•Net Profit was stable at $171 million following an increase in depreciation and amortisation from network investments and net finance expenses.
•Free cash flow for the quarter was A$120 million, up from $99 million (YoY).
•With an increased focus on postpaid customers, Optus added over 54,000 postpaid subscribers.
•Postpaid handset ARPU improved 1.8 per cent excluding Device Repayment Plan (DRP) credits.
•The number of 4G mobile customers increased by 85,000 this quarter, resulting in the total 4G customer base increasing to 5.88 million as at 30 June 2017.
•Optus continued to invest in its mobile network, reaching 96.4% of 4G population coverage.
•In Consumer Mass Market Fixed, operating revenue grew 13.2% mainly on higher NBN migration and NBN customer growth of 143,000 from a year ago.
•Excluding NBN migration and preparation fees, Mass Market Fixed revenue grew 4.4%.
•Optus now has 279,000 NBN broadband customers.

Update on Vodafone Hutchison Australia (VHA)

As of 30 June 2017, VHA’s customer base was approximately 5.7 million. Vodafone Hutchison Australia (VHA) was created through the 2009 merger between Vodafone Australia and Hutchison 3G Australia. The old Three brand was phased out in 2011. More recently, the legacy 2G network has been deactivated and efforts are focused on upgrading the network and migrating subscribers to 4G plans. The company projects an almost $2 billion spend in 2017 on its mobile network and technology to increase coverage, capacity, performance and competition. New construction or upgrades are underway in approximately 450 sites across the country.

Earlier this year, VHA secured 2 x 5MHz of spectrum in Australia’s 700MHz band auction for the reserve price of $286 million, or roughly $1.25 per MHz per head of population covered by the footprint. In addition, VHA renewed the lease on its 2100 MHz spectrum for $544 million, including 2 x 25 MHz in Sydney and Melbourne. In metropolitan areas, VHA now claims the second largest metropolitan low-band spectrum holding, and the largest holdings in the 1800 MHz and 2100 MHz bands.

“Already, the VHA network reaches more than 22 million Australians, and is recognised as the top-performing network in cities with populations above 100,000. And we’re only going to build on that into the future. In 2017, we are putting close to $2 billion into mobile technology, including almost 1,800 new and upgraded sites, spectrum licence payments, and our continued fibre transmission rollout. Our customers know how good our network is, and this positive customer sentiment is reflected through our Net Promoter Score. We are committed to giving customers an even better experience in more places, and offering them even more great value,” stated James Marsh, VHA’s Chief Financial Officer.

“Preparations for our fixed broadband launch are also ramping up, and we know that many Australians are currently unhappy with their current internet service provider. Again, we plan to change the game by offering a service that is simple to understand and gives customers what they are paying for.”

Signing up for nbn’s Cell Site Access Service

In February 2017, Australia's nbn co signed its first agreement for its Cell Site Access Service (CSAS) wholesale product with Vodafone. Hutchison Australia (VHA). The nbn CSAS could be used by mobile operators to expand mobile coverage quickly and cost effectively. Through the CSAS agreement with VHA, the mobile carrier will shortly extend its network coverage in Molong, New South Wales utilising tower sharing and fibre services supplied by the nbn network.
Entering Australia’s fixed broadband market

Vodafone has just announced its entrance into Australia’s fixed broadband market using the nbn infrastructure. One feature of the service is a 4G backup capability that could be activated in the event on an nbn fault. Vodafone’s service will initially launch in Sydney, Canberra, Melbourne, Geelong, Newcastle and Wollongong.

Cisco + Ericsson transformation project

It should also be noted that Vodafone Hutchison Australia is a marquee customer for the Cisco + Ericsson alliance. In January 2017, Ericsson and Cisco Systems confirmed their selection to transform and virtualise VHA’s networks to better prepare for new emerging services. The upgrade uses Ericsson Hyperscale Datacenter System and software components such as Ericsson Cloud Execution Environment, Ericsson Cloud Manager, Cloud SDN controller; together with Cisco WAN Automation Engine, Cisco Network Services Orchestrator (NSO), Cisco IP Network VNFs including IOS XR 9000v and Cloud Services Router 1000v, and both virtualized and physical security technologies such as the Adaptive Security Appliance and Cisco Firepower security gateway, along with services and support. Three years earlier, in 2014, VHA had selected Ericsson to replace and upgrade its earlier core network, including virtual EPC and virtual IMS/ Voice over LTE.

365 Data Centers, which operates eight data centers across the U.S., has acquired two data centers in southeast Florida markets. Financial terms were not disclosed.

The properties are located in Boca Raton and Fort Lauderdale and offer approximately 62,000 square feet of floor space, 8,000 square feet of business continuity space, 4.5 MW of power, and 330 miles of fiber providing direct connectivity to the NAP of the Americas in Miami with under one millisecond of latency.

Dimension Data has appointed Ross Wainwright as Chief Executive Officer of Dimension Data in the Americas. Wainwright will report to Dimension Data’s Group CEO, Jason Goodall.

Prior to joining Dimension Data, Ross was SAP's Chief Customer Officer for its S/4HANA Cloud business unit. Before this, he was Global Head of Financial Services with an end-to-end responsibility for the SAP Financial Services industry; and Global Head of Financial Services managing the company’s Professional Services business. Ross also served as Chief Operating Officer for SAP North America, and Executive Vice President of Services for North America, where he was responsible for the direct leadership of over 3,400 professionals in the Services line of business, including sales, consulting delivery and education. He also held senior leadership positions within SAP’s License team and in Services Sales.